Catalina eyes Asian run-off market
Bermudian-based legacy re/insurer Catalina Holdings (Bermuda) Ltd has made a strategic move into Asia, reaching an in-principle agreement to acquire Asia Capital Reinsurance Group Pte Ltd.
The deal for the Singapore-headquartered reinsurance business is expected to close in the first half of 2020, Catalina said, subject to regulatory and all other approvals.
The acquisition will be Catalina’s first in Asia and marks a strategic move to increase its exposure to the significant run-off market across the continent, the company said, adding that according to PwC’s 2019 Global Insurance Run-off Survey, Asian non-life run-off reserves are estimated at around $100 billion.
Catalina said it intends to use ACR and Singapore as a hub to build a strong Asian run-off platform. Founded in 2006, ACR has offices across Asia, including in Japan, South Korea, Malaysia and Hong Kong.
Chris Fagan, chief executive of Catalina, said: “This is a strategically important transaction for Catalina, as it gives us a platform from which to build an Asian portfolio and to complete our geographic footprint. There are significant opportunities for further acquisitions in Asia, in what is a developing and growing run-off market.”
Mr Hsieh Fu Hua, chairman of ACR, said: “This was a shareholder-led process, which has culminated in a successful exit. Catalina, as the buyer, has the experience and expertise to deliver on ACR’s outstanding commitments to clients and take the business into a new direction.”
He added: “On behalf of the board, I would also like to formally express my appreciation to ACR’s business partners, management, staff and all other stakeholders for their support over the last 13 years.”
As part of the transaction, Catalina said, ACR will cease writing business with immediate effect and all existing policies in force will be serviced until expiry. ACR will continue to honour all valid reinsurance quotes issued to date, as well as liabilities from outstanding commitments to business partners.
ACR had $835 million of shareholder equity, $1.3 billion of gross liabilities including unearned premium reserve, and total assets of $2.1 billion as of September 30, Catalina said.
Its reinsurance portfolio extends across a broad geographic scope and wide range of business lines including property, motor, marine, agriculture, engineering and aviation.
ACR’s existing major shareholders include 3i Group plc (and affiliates), Khazanah Nasional Berhad, Temasek Holdings (Private) Ltd and Marubeni Corporation.
Pro forma for the acquisition of ACR, Catalina will have total assets of $7.5 billion.
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